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The group of lenders including Fortress Investment Group, Soros Fund Management and Monroe Capital will take on the debt and buy the digital media company that became popular with its short documentaries aimed at young internet users.
The latest setback of the digital media boom. After a meteoric rise, Vice Media filed for Chapter 11 bankruptcy, burdened by months without advertisers to finance their operations, forcing them to sell to a group of creditors for some $225 million.
The new owners, in a couple of months, will be Fortress Investment Group, Soros Fund Management and Monroe Capital, although for now, they will continue to produce their newscasts and informative content, as well as pay payroll and debts.
Vice CEOs Bruce Dixon and Hozefa Lokhandwala said the “expedited court-supervised sale process” will strengthen the company and position it for long-term growth, “thus safeguarding the kind of authentic journalism and creating content that make Vice”.
Vice is valued at between $500 million and $1 billion. The bankruptcy filing comes weeks after the company announced it was canceling its flagship show ‘Vice News Tonight’ on HBO and a wave of layoffs that would affect at least 100 of the company’s 1,500 employees.
Why did Vice Media go bankrupt?
Digital advertising has been in a nosedive this year, hurting the profitability of major tech companies from Google to Facebook, which also reported negative numbers. But Vice is not the only one affected, there are cuts in Gannett, NPR, the Washington Post and other media outlets. In April, BuzzFeed Inc. announced the closure of operations.
“Advertising is down across the board, so it’s a test for a lot of digital publishing,” said Megan Duncan, an adjunct professor at Virginia Tech’s School of Communication.
Duncan and other experts point out that there is a turnaround in social media trends, a space in which outlets like Vice have grown rapidly. “One of the things that I think really hurt Vice, and in turn BuzzFeed as well, is that social networks like Facebook are changing their algorithms“said Jason Mollica, a professor at American University’s School of Communication. “When you don’t get the numbers you expect in terms of advertising, you lose money,” he added.
Although we must also point out the change in the habits of news consumers and the challenges faced by the media to win and retain audiences.
According to Duncan, Vice was dependent on different rounds of funding and investors and “never really found the business model in its newer, more modern digital age that was going to sustain it.” This, he says, added to leadership and employment problems.
Vice Media was born in 1994 in Montreal, with the launch of the punk magazine, then moved to New York and became a global media company. The company was characterized by journalism that focused on bold coverage around the world and resonated with young audiences.
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